Testimony Of Frank Spencer

TESTIMONY OF FRANK SPENCER Good morning. I will read this presentation into the record, and ask that it also be marked as an Exhibit and entered into the record. My name is Frank Spencer. I am a member of the United Brotherhood of Carpenters and Joiners of America, and currently hold the position of District Vice President for the UBC’s Eastern District. Prior to becoming District Vice President, I was the Executive Secretary-Treasurer of the New Jersey Regional Council of Carpenters. The New York City District Council of Carpenters is located at 395 Hudson Street, New York, New York. There are eleven local unions affiliated with the District Council. The reported combined total membership of the local unions, as of August 31, 2009, is 24,951 members. Pursuant to his authority under the UBC Constitution, by letter dated August 10, 2009, UBC General President Douglas J. McCarron imposed emergency trusteeship over the District Council. General President McCarron appointed me as supervisor with full authority over the District Council. A copy of General President McCarron’s August 10, 2009, letter is attached to this presentation and marked as Exhibit “A”. This letter was mailed to the membership and posted on the Council’s website, which is accessible to the membership of local unions

affiliated with the District Council as well as the general public. That website address is www.nycdistrictcouncil.com. The reasons for the emergency trusteeship are clearly spelled out in General President McCarron’s letter. For example, a federal indictment was issued alleging criminal conduct by District Council officials. Specifically, “(a)ccording to comments regarding the indictment issued by the United States government, defendants named in the indictment, including District Council employees and/or representatives, ‘are charged with unlawfully receiving money, loans, or other things of value from contractors, in a total amount of approximately one million dollars. …In exchange for the bribes, the defendants allowed and helped certain contractors to defraud the union and its benefit funds out of millions of dollars by permitting the contractors to, among other things, pay union members cash at below-union rates, without benefits; employ illegal aliens and non-union workers on their job sites; and avoid payment to the union benefit funds in violation of applicable [collective bargaining agreements].’” The indictment is currently pending in the United States District Court for the Southern District of New York. The indictment is also posted on the Council’s website, which is accessible to the membership, and will be entered into the record of this proceeding through another witness. Of particular concern, General President McCarron noted in the August 10,

2009, letter that “it appears that at about the time of their arraignment on the charges, District Council employees named in the indictment were subject to testing for drug use. Reports indicate that of the ten defendants named in the indictment, eight defendants, including the Executive Secretary-Treasurer, either tested positive or admitted to drug use; two defendants refused the tests.” These allegations are described in General President McCarron’s letters, and much greater detail will be provided to the Hearing Committee through the testimony of UBC Representative Phil Newkirk. Brother Newkirk was assigned to investigate the District Council with respect to the imposition of trusteeship. Terry Mooney, a certified public accountant, who reviewed the financial aspects of the District Council’s operation, will also appear before the Committee.

General President McCarron sent a letter to the membership, dated August 13, 2009. This letter was posted to the District Council’s website. A copy is attached as Exhibit “B”. In this letter, General President McCarron explained the need for trusteeship, and his authority under the UBC Constitution to take action, among other things. Thus, considering the information that was brought to the UBC’s attention, General President McCarron concluded that, “the affairs of the District Council are being conducted in a manner detrimental to the welfare and best interests of the District Council, the UBC, and its members, and/or contrary to the provisions and requirements of the UBC Constitution, and that the continued operation of the District Council is in jeopardy.” The UBC needed to act and act quickly, and did so by imposing emergency trusteeship over the District Council. In my capacity as supervisor, I removed officials of the District Council and took control of the District Council’s assets, among other things. I have been assisted in my supervisory duties by UBC District Representative Ben Glenn, and Pete Thomassen. As supervisor, I have also taken steps to keep the membership informed. Shortly after taking control of the District Council, I communicated to the membership to explain what was being done with the District Council as a result of

the trusteeship. Attached as Exhibit “C” is my letter to the membership dated August 25, 2009. This letter is posted to the Council website. Since becoming Supervisor, we have undertaken several measures in an attempt to correct problems plaguing the District Council. Listed below are changes that have been made or anticipated to be made shortly: 1. implementing mandatory drug testing for the entire staff of the District Council, which will be followed up by random screenings; and, the Trust Funds have implemented such a policy as well for its employees; 2. implementing LMRDA Section 504 background checks for all Council employees; and, the Trust Funds have done the same for Trust Fund employees following ERISA standards; 3.

rotation of all Council Business Agents on a quarterly basis;

4. conducted and are conducting sweeps of all Local Union areas by Council staff checking for non-union jobs, contract compliance, and comparison of head count and I.D. of each carpenter with the stewards’ reports; 5. in conjunction with the anti-corruption committee we will be creating a team after the background checks are completed to do targeted sweeps of projects recommended by the committee; 6.

conduct audits of all Local Unions in the District Council;

7.

obtain new accounting services provider;

8. implemented cash management controls which have placed 90% of the assets under FDIC Insurance and at the same time the anticipated interest income will net the Council an additional $300,000 to $500,000 per year; 9.

anticipate change(s) in the Council’s Auto and Credit card policies;

10. implemented a tightening of controls on the dispatch system which virtually eliminates Business Agents’ involvement. By letter dated September 23, 2009, General President McCarron notified the membership of local unions affiliated with the District Council again of the emergency trusteeship, but also of the date, time and place of today’s and tomorrow’s hearings and of their opportunity to appear before the Hearing Committee and present testimony and other evidence. General President McCarron also directed that I, as supervisor, mail the September 23, 2009 letter to the membership, which was done. I sent a letter to the membership, dated September 24, 2009, accompanying General President McCarron’s letter. Furthermore, copies of both letters have been posted to the Council’s website. Thus, all members of local unions affiliated with the District Council have been notified of today’s and tomorrow’s hearings. Copies of General President McCarron's September 23, 2009 letter and a copy of my September 24, 2009, letter are attached to this presentation and marked as Exhibit “D”. Since assuming the supervisor role of this trusteeship, I have devoted considerable time in reviewing the Council’s affairs. I have concluded that much more work needs to be done. For example, as noted in reports regarding the indictment, District Council officials either tested positive for drug use or admitted to drug use at about the time of their arraignment on the charges. In that regard,

Council employees have been terminated as a result of the drug testing requirement, which was implemented soon after trusteeship was imposed. Although progress is being made, we need to ensure that safeguards are in place so the kind of conduct that lead to trusteeship is not repeated. We need to ensure that the safeguards which have either just been or are in the process of being implemented are fully implemented. And following their implementation, we must monitor them for effectiveness while looking for any additional steps that need to be taken. For example steps have been taken to insure that the contractor associations take appropriate steps to remove the indicted contractor representative Joseph Olivieri as a trustee on Council trust funds We need to continue to look at the District Council’s anti-corruption efforts, and the way the District Council is run on a day-to-day basis, and make improvements. Accordingly, I believe that trusteeship over the District Council must continue. The foregoing represents a brief and general overview of the events leading up to these hearings. As I mentioned earlier in my testimony, you will hear in greater detail from Phil Newkirk, and others, regarding their respective findings and the need for continued trusteeship over the District Council. I believe that once the Hearing Committee considers the evidence and

testimony presented to it, the Committee will conclude that the UBC was fully justified in placing the District Council under emergency trusteeship, and that continued UBC trusteeship is necessary until such time as the District Council is able to function effectively. This concludes my testimony before the Hearing Committee at this time, and I am available to answer any questions that the Committee may have regarding my testimony, or the UBC's trusteeship over the District Council.